Big week ahead. Trade Talks and CPI/PPI data ahead. Trade Ideas for Monday Jun 9
Don't get trapped needing to be right 100% of the time! An example of a trade setup that didn't work.
Mid day moves are slow starting to come back, and Friday’s close provided limited opportunity. Thankfully Credit Sells provide a great way to take advantage of gap up with high win rates.
I’ll go over how I planned that trade, and also answer the question for a member who was frustrated about going short and it not working and I how my thought process works during that price action.
SPY / SPX
IDEA: Fake out breakout on 599.50
I anticipated 2 trades here. One is given the 4 level gap up, we wont see a 6 level move. So I alerted this..
During the pop at 9:45 these went as high as $2 and by lunch these were 0.20 and 0 by end of day. Simple trade, almost no effort. Just set take profit orders and walk away.
Let's talk about the fake out breakout idea. we crossed 599.50, there AFTER the first hour we have high volume fail at 600.30 and a lower high. So we target 597.50 break and 595 to 593 for a gap fill. That is the trade setup and process. BUT we also Take profit along the way.
I took SPX 5980p for $5 these ran to 10-12. I locked most in at 10 for a double and left runners that got stopped. After doing a trade review, I chose the wrong strike! If I took 5950p instead these ran from 1.50 to 4.50. offering a 200% payout instead of the 100%. Remember to always review your trades and ask yourself what could I have done better and build that experience.
Now here is the issue…. There wasn’t continuation.
Frustrated member IDEA: Continuation on support break on 597.50
Let’s first talk about the good and then the “bad”
Pros for the short
4+ level gap up could see a 2 level move and possible a gap fill
Large gap beween 597.50 and 595.
Cons for the short
While one can go short on 597.50, it’s a chase
4+ levels gaps sometimes don’t reverse and turn into consolidation days
The only place to consider short on Friday was at the 599.50 break or at the vwap rejection. Chasing at support can work but this is where timing comes in. I tend to avoid opening trades from 12 to 1pm. I tried to get back home by 1pm on Friday from my errands, but no dice.
Avoid trades during the lunch hour to avoid losses. I miss profits but I strongly believe the losses outweigh the gains.
I was rushing home and wanted to go long on 597.50 reclaim but missed it. Classic failed breakdown reversal setup implying we should test 600.30 again and we got just that. Unfortunately I missed it. Here is what the 6000c did. on the failed breakdown reversal.
A nice 200% gainer opportunity at 5 (after the 597.50 reclaim) or 400% at 3 (anticipating reversal)
There is massive opportunity in this market. Are you taking advantage? Literally have planned and alerted trades that pay over 500%! You will need patience to wait for entries and the exits. But if you have self discipline or trust bracket orders, my process can help you get the results you want.
Thoughts from Friday’s price action:
Market is selling near highs BUT the “buy the dip” algos remain in effect.
Large Dips continue to get bought
Likely get a gap up due to consolidation and hope of positive results on China/US trade talks in London
What is Two Hour Trading?
Two Hour Trading is my system for finding and executing trades while spending less than two hours a day trading. My goal is to earn 100-300% on the capital I risk while waiting for 1000%+ gain trades to set up. Key benefits include:
High-quality trades with excellent reward vs. risk
Avoiding overtrading and losses from it
Trading to win vs. trading not to lose
Stacking the deck in your favor
If you are busy and want to see my commentary and ideas in real time consider joining THT-PRO.
Education
How to Join a Strong Trend
The process I typically follow for joining a strong trend are as follows:
All day grinder: join on dips to 20ma
Multi-day grinder:
Join either on support test of morning lows or failed breakdown reversal at key level
Join at VWAP mid day or end of day
Keep it simple. Don’t chase, wait for support levels for great risk/reward entries!
Systematic Profit Taking
How do I take profits? I keep it relatively simple. Depending on the entry and range to the next levels I typically with take profits 50-100% of my profits at 3-10R and then raise stops to above entry with a goal of letting runners take me to the next level or 2 and to then reload if I believe we are consolidating before the next leg.
I then repeat the same process on the reload.
Securing Profits on Options overnight
Sometimes you get this massive paper gains overnight on options but you can’t secure it right? Well if you have a big enough account and a margin account if you have calls you can. What you need to do is buy or sell the stock overnight. and the option turns into a hedge against that position essentially securing your profits.
I’m out of time, but I’ll make a video on this later.
Trade Ideas - Plan for Mon Jun 09
Stick to process. The process and trade setups I teach works. Rinse and repeat over and over again. There will be losses. Any good system will have them. Being systematic also means the gains will repeat and come again too. If you keep changing your system/process trying in an effort to never lose a trade, you will never get to where you want to go.
Ideas
Being Monday and small gap up and VIX elevated I will likely take it easy in the morning. I want to see how market reacts today to key levels and let 0DTE contracts get cheap. Overall I want to see a headline from trade talks today and then see the price action after before opening a trade.
Here are the levels and price action I’m looking for today…
